Automotive

Why I have to pay $667/month for leasing a $33500 car for 3 years?

  • Last Updated:
  • Jun 7th, 2021 12:05 am
[OP]
Newbie
Jan 26, 2019
39 posts
32 upvotes

Why I have to pay $667/month for leasing a $33500 car for 3 years?

never leased a car in my life until 2018. no experience on dealing with dealer for leasing.
I was in a rush to get a car on 2018 and chose to lease a Chevy Volt for 3 years with 72000KM in 2.5% lease rate. At the beginning, I had no idea whether or not $667/month is fair amount for leasing this Volt. but a few months later, I felt something wrong. How come I am paying more than leasing those luxury car, like BMW, Audi. I know I might be rib off, but don't know which part went wrong. I was able to talk the car down to $33500 but still need to pay $667/month for the leasing.
Looking at the contract. I think there's something not right on the "Estimate Residual Value of the Vehicle". the car is only valued $11974 after 3 years. but look at the used car market today, they are selling 2018 Volt for around $22000.
is this "Estimate Residual Value of the Vehicle" negotiable too?
anything else I should learn from this awful leasing?
Actually, the car is pretty good, but just think it's not worth to pay such a high leasing fee. Any comments are welcome.
63 replies
Deal Guru
User avatar
Oct 5, 2008
14212 posts
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Toronto
your monthly payments are high because of the low residual value.

You signed a contract, it's binding, there's nothing that can be negotiated now.
Sr. Member
May 2, 2017
863 posts
1144 upvotes
Yeah, seems like the residual is low, so you'll pay more.

The good news is that you'll have the opportunity to buy it out at lease end for the residual value, and if it's worth more at that time, you can then turn around and sell it for that amount. For example, if the residual is $12,000 (rounding your number), and you can sell the car privately for $22,000, you can buy it out and sell it to recover $10,000.
Deal Expert
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Jul 30, 2007
29347 posts
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Toronto
such a low residual value, you can always buy it out and then sell it privately (to recover some of the 'overpaid' $ on the lease .. per se)
[OP]
Newbie
Jan 26, 2019
39 posts
32 upvotes
Swerny wrote: your monthly payments are high because of the low residual value.

You signed a contract, it's binding, there's nothing that can be negotiated now.
Yes, I know that. Actually, the lease will be ended by this month.
My question is how you guys negotiate the residual value. it's brand new car, and Volt is plug in hybrid, technically no reference for the residual price.
Deal Addict
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Mar 7, 2007
4437 posts
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You paid for most of the car already.

Do not returned it, buy it out.
Deal Expert
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Jul 30, 2007
29347 posts
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Toronto
mortgageseeker wrote: Yes, I know that. Actually, the lease will be ended by this month.
My question is how you guys negotiate the residual value. it's brand new car, and Volt is plug in hybrid, technically no reference for the residual price.
residual is non-negotiable.
[OP]
Newbie
Jan 26, 2019
39 posts
32 upvotes
TheTall wrote: Yeah, seems like the residual is low, so you'll pay more.

The good news is that you'll have the opportunity to buy it out at lease end for the residual value, and if it's worth more at that time, you can then turn around and sell it for that amount. For example, if the residual is $12,000 (rounding your number), and you can sell the car privately for $22,000, you can buy it out and sell it to recover $10,000.
I am not sure if I will want the hassle to recover couple thousand dollars. $22000 is the list price I found from autotraders.ca . from Craigslist, I saw people want to sell the same year/model for around $19000.
My car had accident during the lease. was pushed forward by a car behind and hit the front car. damage wasn't that bad, but the repair cost a lot, close to $7000. Usually car with accident isn't that easy to be sold privately. Also there are some scratches on the bumper and wheels AutoVIN inspector estimate $415 for repair.(BTW, I bought XS Gear for this car, anybody know if this repair cost will be covered?)
[OP]
Newbie
Jan 26, 2019
39 posts
32 upvotes
mortgageseeker wrote: I am not sure if I will want the hassle to recover couple thousand dollars.
Maybe I should rethink about it. it seems the used car market is hot this year because of the chip shortage on the new car.
Member
Feb 8, 2010
430 posts
336 upvotes
mortgageseeker wrote: I am not sure if I will want the hassle to recover couple thousand dollars. $22000 is the list price I found from autotraders.ca . from Craigslist, I saw people want to sell the same year/model for around $19000.
My car had accident during the lease. was pushed forward by a car behind and hit the front car. damage wasn't that bad, but the repair cost a lot, close to $7000. Usually car with accident isn't that easy to be sold privately. Also there are some scratches on the bumper and wheels AutoVIN inspector estimate $415 for repair.(BTW, I bought XS Gear for this car, anybody know if this repair cost will be covered?)
No hassle, let me take over the lease end car. I pay you 1k. I don't drive it, will take the car as trade in against my new car purchase to save a few k$.

Alternatively, you can take the car as trade in for your next car, to save some money.
Sr. Member
May 2, 2017
863 posts
1144 upvotes
mortgageseeker wrote: I am not sure if I will want the hassle to recover couple thousand dollars. $22000 is the list price I found from autotraders.ca . from Craigslist, I saw people want to sell the same year/model for around $19000.
My car had accident during the lease. was pushed forward by a car behind and hit the front car. damage wasn't that bad, but the repair cost a lot, close to $7000. Usually car with accident isn't that easy to be sold privately. Also there are some scratches on the bumper and wheels AutoVIN inspector estimate $415 for repair.(BTW, I bought XS Gear for this car, anybody know if this repair cost will be covered?)
You could always put it up on auto trader/kijiji to see if anyone is interested. As long as you get more than ~$14,000 for it (your buyout plus tax plus the repair), you would be making money on it. Even if it's only $16,000 you get for it, that's $2000 in your pocket.

Lots of people don't care too much about minor accidents anymore. Most cars have them these days because people seem to suck at driving.
[OP]
Newbie
Jan 26, 2019
39 posts
32 upvotes
TheTall wrote: You could always put it up on auto trader/kijiji to see if anyone is interested. As long as you get more than ~$14,000 for it (your buyout plus tax plus the repair), you would be making money on it. Even if it's only $16,000 you get for it, that's $2000 in your pocket.

Lots of people don't care too much about minor accidents anymore. Most cars have them these days because people seem to suck at driving.
My only concern is how to get the money safely when selling in private, lot of scam/trap.
Deal Addict
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Dec 21, 2013
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GTA
Honestly with your luck and track record, I’d just be done with the contract and start again fresh.

Ask questions here first before you sign for a new car.
Newbie
May 26, 2016
84 posts
72 upvotes
mortgageseeker wrote: I know I might be rib off, but don't know which part went wrong.
Maybe you should have done your homework in 2018 when you leased and when GM announced that Volt will be discontinued.
Deal Addict
User avatar
Feb 20, 2015
1635 posts
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Southern Ontario
Sounds like my buddy. Never read the agreement and took a bunch of trips all over the place. Didn't realize his 20k extra KM would be charged afterwards.

He never Leased again.

Buying or Leasing new cars has never been an investment. You lose either way, do the math and see what's better for you and go from there. Usually if you find it's not worth it you don't get caught on the fishhook twice. But then again, I know people who have been divorced 3 times.
[OP]
Newbie
Jan 26, 2019
39 posts
32 upvotes
Ttn545 wrote: Maybe you should have done your homework in 2018 when you leased and when GM announced that Volt will be discontinued.
I was in a rush. the only car in my family had accident (the other driver's fault) on June 2018 and was total lost. I had to get a car within couple days. GM made the announcement on Nov.2018
Deal Expert
Mar 23, 2004
29124 posts
9649 upvotes
Why do you have to pay $667/month? Uh is this a trick question?

Because no one is going to give you a car for free maybe?

Anyway your residual is low, like very low. For a car that's only three years old, you basically paid 2/3rds of the car. This should answer your question about the high monthly payment. Leasing 101...the higher the residual as a percentage of the total price, the lower your payments will be other things being equal (i.e. not comparing a 2yr lease to a 4yr one). There's nothing that indicates you got ripped off per se, just that you paid for a lot of the car in a fairly short period. It wasn't really a good "hand it back" lease but it's really not that bad for buying out.

Since the residual is low and the used car market has gone bananas, you're actually in a good position now as you have somewhere near $10k to play with if you can actually sell the car for what you're saying. Or yes you can negotiate on another/new vehicle by a dealer basically buying out your old car and putting it on their lot. They will then be able to discount your new car given they know they will make a big profit putting your old one on their lot. But, like any "trade in" situation you may not do as well as selling privately. The catch is you would have to pay the tax on the residual (unless you've already included that) to buy it out, so it might just be a wash.

Best tip here is to do more research and crunch more numbers before proceeding blindly. Proceeding blindly will only end up in another thread on here in a little while saying,"It was my first time ending a lease and getting another car, did I get ripped off?" lol
Last edited by ES_Revenge on Jun 2nd, 2021 6:03 pm, edited 1 time in total.
Deal Addict
Dec 27, 2007
3603 posts
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Edmonton
mortgageseeker wrote: ...
OP, can I meet you and we can go to the dealership together, I will give you cash or a cheque for whatever they say the residual is and give you an extra $500. You just sign papers that your selling me the car for $500. And you won't need to worry about it anymore, I will get it transferred over and register it in alberta without a problem
warming up the earth 1 gas fill-up at a time...
You only live once, get a v8
Deal Addict
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Feb 20, 2015
1635 posts
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Southern Ontario
mortgageseeker wrote: I was in a rush. the only car in my family had accident (the other driver's fault) on June 2018 and was total lost. I had to get a car within couple days. GM made the announcement on Nov.2018
That's a Car Salesman's wet dream. When they see the car pull up on it's last legs or you go in with a sob story and need a car right away, you get full price and extra fees/options piled up.

My guess is you paid full sticker/lease rate and got piled on. You were in a hurry and ready to sign.
Deal Addict
Nov 12, 2004
2313 posts
1003 upvotes
Hometown
mortgageseeker wrote: My only concern is how to get the money safely when selling in private, lot of scam/trap.
The used car market is a SELLERS market right now. You can DEMAND certain conditions to ease your anxieties in this market that were unheard of 15 months ago....

List the car BEFORE you have to return it. Within the ad state the Volt will be AVAILABLE certified on a specific date in the future. If you get someone interested who wants to buy it. INSIST on a non refundable down payment. Buy out the car then just don't have another accident in that time span LOL.

Double dip on the certification you will need to buy it out. When you have it in being certified for you to buy it out. INSIST that, that is the only time you will allow them inspect it. Then they can bring their own mechanic if the dealership/garage allows it. They can USE the same certification to register the car in Ontario. So if they squawk about it being your garage use that as your reasoning.

Buyer will be required to meet you at their bank or a branch of their bank to pay for the vehicle. Once there in person you can arrange to have their bank transfer the money to you safely and securely, for a nominal fee.

You might not get 22000 for it or you might get even more in month as prices just keep soaring on desirable used vehicles. Even with the cost of buying it out you should come out ahead. If you "presell it" you will KNOW roughly how much before you take any risk.

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